Correlation Between Lippo Karawaci and Greenwood Sejahtera

Can any of the company-specific risk be diversified away by investing in both Lippo Karawaci and Greenwood Sejahtera at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lippo Karawaci and Greenwood Sejahtera into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lippo Karawaci Tbk and Greenwood Sejahtera Tbk, you can compare the effects of market volatilities on Lippo Karawaci and Greenwood Sejahtera and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lippo Karawaci with a short position of Greenwood Sejahtera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lippo Karawaci and Greenwood Sejahtera.

Diversification Opportunities for Lippo Karawaci and Greenwood Sejahtera

0.72

Correlation Coefficient

Lippo Karawaci  Greenwood Sejahtera

Poor diversification

The 3 months correlation between Lippo and Greenwood is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lippo Karawaci Tbk and Greenwood Sejahtera Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenwood Sejahtera Tbk and Lippo Karawaci is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lippo Karawaci Tbk are associated (or correlated) with Greenwood Sejahtera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenwood Sejahtera Tbk has no effect on the direction of Lippo Karawaci i.e., Lippo Karawaci and Greenwood Sejahtera go up and down completely randomly.

Pair Corralation between Lippo Karawaci and Greenwood Sejahtera

Assuming the 90 days trading horizon Lippo Karawaci Tbk is expected to under-perform the Greenwood Sejahtera. In addition to that, Lippo Karawaci is 2.41 times more volatile than Greenwood Sejahtera Tbk. It trades about -0.14 of its total potential returns per unit of risk. Greenwood Sejahtera Tbk is currently generating about -0.1 per unit of volatility. If you would invest  13,600  in Greenwood Sejahtera Tbk on October 20, 2024 and sell it today you would lose (1,200) from holding Greenwood Sejahtera Tbk or give up 8.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Lippo Karawaci Tbk  vs.  Greenwood Sejahtera Tbk

Lippo Karawaci Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lippo Karawaci Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Greenwood Sejahtera Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenwood Sejahtera Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Lippo Karawaci and Greenwood Sejahtera

The main advantage of trading using opposite Lippo Karawaci and Greenwood Sejahtera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lippo Karawaci position performs unexpectedly, Greenwood Sejahtera can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Greenwood Sejahtera will offset losses from the drop in Greenwood Sejahtera's long position.

The idea behind Lippo Karawaci Tbk and Greenwood Sejahtera Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.